Market pricing for a loan -- Please Help!
Guys, please can someone help with this -- I can't find the information on the internet.
I'm supposed to conduct a market pricing analysis for a 5 year USD corporate loan to be issued by the bank I work for. There are several publicly traded bonds issued by the client's peers (the client is a financial institution, so are the peers). Can you, please, help me understand how to analyze the traded bonds to come up with a margin recommendation (SOFR + xxxbps)? Do I take the yield-to-maturity of the traded bonds of a similar tenor and adjust somehow to come up with the number?
I just started on this job, it's a relatively new field for me and I can't really ask anyone for help here. This forum is my last hope.
Please ignore if this is not helpful : But normally in Lev Fin, we always have margin data (ratchets) on the previous issuances, nothing that we need to derive to price our current issuance (also the MDs know it from general market conditions).
But I’m just an intern so sorry if this was useless to you.
Go ask someone who is more senior in the team (senior analyst, associate, etc). You are taking the worst possible approach to this - you won’t get something done to the right standard by asking an anonymous bunch of people who have no clue about the situation, your bank, your team… how to do the work.
Junior analysts fuck up a lot by not asking questions. Do the right thing and go ask for help.
@Pipole4, I know you're right in theory. In practice, I joined a very small team that has neither the time nor the patience for my questions. Ideally, senior colleagues would help junior ones and answer their questions. Maybe that happens in other banks. Here it's sink or swim. But I need the job and I'm trying to learn as fast as I can. It's a steep curve and I could use a little help with this particular assignment. I've tried to describe the issue in detail and would appreciate any guidance.
Yep, take bonds of the same tenor and credit rating, then subtract the 5-year SOFR swap rate from the yield to approximate the margin.
Thanks so much for your help! You made my day! Quick clarification: I subtract the sofr swap rate from the yield to maturity, right?
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